24 November 2016

As we enter the final few weeks of the
year, a number of lenders have entered into an apparent 'interest rate war' assisting First Time
Buyers, Residential mortgages and the Buy to Let sectors. But this is
also happening in the ‘Near Prime’ arena. I’m calling it ‘Near Prime’, but it
has many other names including, Credit Repair, Almost Prime, Adverse and so
on. In short, it’s an area of mortgages that cater for those who have had
some sort of financial issue in the past.

This is a growing sector and many lenders will now cater for
missed mortgage payments in the last 12 months, Defaults, County Court
Judgements (CCJs), discharged bankrupts/IVAs and those who are in a debt
management plan.

This area of the market
took a battering back in 2007 as many lenders who offered these types of
mortgages were shut down or mothballed. Today, the regulatory lending
restrictions are more stringent than back then and the new breed (some never
really left) have a whole new outlook on the term ‘responsible lending’. Where there is demand, there will always be
supply.

Rates start from the late
1%s and go right up to the early 8%s, depending on individual circumstances. Some lenders will lend up to 90% of the
property value in someinstances and
will cater for both employed and self employed.

Financial issues do
adversely affect credit scores (the normal assessment process used by a lender
to decide whether to lend or not), and as such, some Near Prime lenders will
manually review on a credit search, rather than resort to a credit score.

Of course, a lender will
only consider those who have endeavoured to right the financial issues of the
past. They will not entertain those who continue to flout good financial
management.

Finally, the Near Prime
lender is a ‘stepping stone’. Most issues tend to disappear from a credit
search after a few years. Therefore, the aim would normally be to cater for
current requirements on a short to medium term basis with the longer term
outlook being structured to enable the customer to get back onto high street
mortgage offerings, as quickly and cost effectively as possible.

17 November 2016

Some eye watering statistics from The Money Charity this
week. The Charity has reported that
total mortgage lending stood at £1.35 trillion at the end of September. This is up from £1.275 trillion in 2015. Averaged over the 11.1m households with a
mortgage equates to £118,693 in September.

The average interest rate was 2.74% and according to The
Council of Mortgage Lenders, the average for new loans was 2.27%. They also suggested that the average First
Time Buyer deposit was 15% (£28k in July) and the average house price amounted
to £184k (August) for first timers. Yet
First Time Buyers borrowed on average just 3.45 times their income!

There were 40,533 loans approved for house purchase in
September, according to the British Bankers Association, similar numbers to a
year earlier. The average loan approved
was circa £176k.

This is interesting as it is a common knowledge that owning
a home can be cheaper than renting. The
report goes on to suggest that inclusive of all benefits, private renters spent
an average of 43% of their income on rental payments. In comparison, owner occupiers spent on
average 19% of income.

And as we enter the run up to Christmas, it's also useful to
note that the average interest rate on credit card lending in September was
18.49%, which is 18.24% above the Bank of England Base Rate of 0.25%! Remember, doesn't matter which type of
credit you use to fund seasonal spends, at some point they all need to be
repaid!

And finally, a number of lenders including Platform (Part of
Co-op), Virgin Money, Nationwide, Coventry Building Society, Barclays, Halifax
and TSB have all changed rates in the last ten days. The majority with rate cuts and attractive
options for new customers including cash back for purchases and free valuation
and free legals on remortgages. There
are certainly some fantastic deals available in the current climates. So if you are thinking of reviewing your
mortgage options, now might just be a good time to find that paperwork!

10 November 2016

I start with Kensington Mortgages this week. The lender has launched a number of new
products including options to cater for those looking at investing in Houses of
Multiple Occupation (HMOs). Similar to a
normal Buy to Let, bought for investment, capital growth and income potential,
yet these products allow for more than one family occupation and each on a
separate assured short-hold tenancy agreement (AST). This can increase the rental yield return
achievable for the owner and these products allow for properties with up to six
bedrooms. HMO's normally require a
licence from the council and investment will be area specific. Good for near colleges, universities,
commuter facilities etc. This is an
increasing market as more and more people rent a room, over renting a whole
house. Demand for specialist products
which require a more individual approach will grow as investors look for ways
to derive greater value from their investment.

Kensington have also launched products which allow for
property conversions in to multi units, that still remain on one title. For example, where a house has been converted
in to three self contained flats. Or
where a property has a separate annexe etc.

New Lender Vida Homeloans has also expanded their
distribution this week to include AToM.
Their products include HMOs, Buy to Let lending in a Limited Company
name, Portfolio landlords, ExPats, and Buy to Lets for those with impaired
credit, so County Court Judgements, Missed payments, etc.

The Buy to Let sector generally is becoming very competitive
and despite an increasing number of options and new lenders launching in to the
market, demand is still increasing. Whilst first time buyers struggle to get on
the property ladder and savings interest rates remain low, many continue to
invest long term in to property and there's no immediate reason why this should
change. However, with all of the recent
tax changes on Buy to Lets, you should not only seek professional mortgage advice,
but tax advice from an accountant who understands property.

03 November 2016

Following
a dip in July and August, mortgage approvals bounced back in September. According
to the Bank of England's Money and Credit statistics, mortgage approvals
totalled 118,470 in September with a value of £19.1bn, compared to 113,524 and
£17.6bn in August.

The
number of approvals for house purchase reached 62,932 with the value at
£11.1bn, up from August, but still lower than the six month average of 64,481.
Remortgage approvals totalled 42,440, also down on the six month average of
41,882 but also higher than August.

AToM
saw a busy October and we don't expect much to change with the run up to the
end of 2016. And of course, with Help to Buy 2 finishing at the end of
the year, we do expect to see a slight rush as people with small deposits seek
to gain approval on the product before it's withdrawal.

Nationwide
has increased the maximum loan to value (LTV) for customers remortgaging from
other lenders on a like for like basis from 85% LTV to 90% LTV. Rates for
the two year remortgage product start from 2.39%. As always, terms apply….!

TSB
has removed its mortgage application fee, which previously cost £265, from all
of its residential and buy to let mortgages. This
lender has also launched new products including a three year fixed rate
starting at 1.84% for a 60% LTV. They also have products right up to 95%
LTV.

No doubt we'll see similar from other lenders as they seek to increase volumes pre
Christmas.

And
finally....New figures from HMRC report that one in four properties bought in
the UK
in the third quarter of 2016 was a buy to let or a second home. The
introduction of the 3% Stamp Duty surcharge in April has seen figures published
for the first time indicating how many properties are bought to rent out.
The data published by HMRC shows that it has collected some £670m in Stamp Duty
since the additional 3% charge was introduced. With First Time
Buyers still struggling to get on the ladder, I can't see this changing anytime
soon!